825.6374/1117: Telegram
The Secretary of State to the Ambassador in Chile (Culbertson)
19. Your 46, March 16, 6 p.m., 47, March 17, 11 [10] a.m., and 49, March 20, 4 p.m. Please see the Minister for Foreign Affairs, and also the President if you judge this advisable, and leave an aide-mémoire in the following terms:
“The American Ambassador has received instructions from his Government to express the fundamental importance which his Government attaches to the principle of respect for international obligations. This principle lies at the very base of international life. Scrupulous regard for it makes for harmonious relations between states, and in reliance on it the citizens of one state go into the territory of another state and there engage in the development of legitimate commercial, industrial, and other activities. In view of the statements [Page 168] in the note of the Chilean Minister for Foreign Affairs to the American Ambassador of October 15, 1932, the American Government has been confident that the Chilean Government would uphold this principle of respect for international obligations.
It is, nevertheless, very disturbing to hear that the Chilean authorities have recently by unilateral action, without warning or consultation, set aside without their consent the arrangements made with American citizens. This was done, specifically, in the action taken by the Chilean authorities in suppressing the 60 peso charge created by Chilean law for the service of the so-called Cosach bonds. This action is the more to be regretted since it appears that the Chilean authorities and the private interests had been in agreement that they should seek through cooperation to work out a complete and mutually satisfactory plan for the liquidation and reorganization of the company’s affairs. It is obvious that a solution of this problem, as of any other problem involving the interests of nationals of a foreign state, can only be attempted on the basis of respect for all interests concerned. For a government as one party in interest, by unilateral action without consultation or agreement, to override and set at nought the interests of others, would strike at the very basis on which rest the relations between states.
In the light of the foregoing principles it seems to the American Government that the best approach, in an effort to reach a satisfactory solution of the Cosach problem, lies in a return to the methods of full and frank cooperation between all interests. The American Government, therefore, expresses the very earnest hope that appropriate steps may be taken by the Chilean Government which will restore an atmosphere of mutual confidence for the resumption of discussions between all interests in an effort to arrive at a solution equitable to all concerned.
The principle of respect for international obligations which the American Government invokes in this case covers equally, of course, the whole field of Chilean-American relations.”
Have the American interests considered the possibility of arbitration of the present difficulty under Article 35 of the basic Cosach law of July 21, 1930? If arbitration were arranged it would open a way for the Chilean Government to hold in abeyance the action taken against the 60 peso charge and afford an opportunity for the resumption of discussions. Please cable your reaction to this.